By TIOL News Service

NEW DELHI, SEPT 05, 2017: THE issue is - Whether when the High Court is the platform for second appeal in a case, it cannot decide a case without formulating the substantial questions of law. YES is the Apex Court verdict.

Facts of the case

The assessee is a former Maharaja. He was subjected to weath tax assessment. The case pertained to the Assessment Years 1981-82, 1982-83 and 1983-84. The issue was decided by the Tribunal in favour of the assessee but the High Court had reversed the same.

On appeal, the Apex Court held that,

++ Section 27-A of the Act, which provides a remedy of appeal to the High Court against the order of the Income Tax Appellate Tribunal, is modeled on existing Section 100 of the Code of Civil Procedure, 1908. And the language of Section 27-A of the Act and Section 100 of the Code is identical. Both the Sections are, therefore, in pari materia. It is a case where Section 100 of the Code is bodily lifted from the Code and incorporated in Section 27-A of the Act with minor additions and alterations by following the principle of “legislation by incorporation";

++ the interpretation made by this Court of Section 100 in Santosh Hazari’s Case, would equally apply to Section 27-A of the Act because firstly, both Sections provide a remedy of appeal to the High Court; Secondly, both Sections are identically worded and in pari materia; Thirdly, Section 27-A is enacted by following the principle of “legislation by incorporation”; fourthly, Section 100 is bodily lifted from the Code and incorporated as Section 27-A in the Act; and lastly, since both Sections are akin to each other in all respects, the appeal filed under Section 27-A of the Act has to be decided like a second appeal under Section 100 of the Code;

++ we find that the High Court proceeded to decide the appeals without formulating the substantial question(s) of law. Indeed, the High Court did not make any effort to find out as to whether the appeals involved any substantial question(s) of law and, if so, which is/are that question(s) and nor it formulated such question(s), if in its opinion, really arose in the appeals. The High Court failed to see that it had jurisdiction to decide the appeals only on the question(s) so formulated and not beyond it. [Section 27(5)];

++ we are of the considered view that the High Court orders are not legally sustainable and thus liable to be set aside;

++ Both the cases are remanded to the High Court for deciding the appeals afresh in accordance with the observations made above.

(See 2017-TIOL-323-SC-WT)